U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18555 / January 28, 2004

Securities and Exchange Commission v. Safety-Kleen Corp., et al., United States District Court for the Southern District of New York, 02 Civ. 9791 (CSH)

COURT ENTERS FINAL JUDGMENT AGAINST KENNETH W. WINGER AND PAUL R. HUMPHREYS, FORMER TOP EXECUTIVES OF SAFETY-KLEEN CORP.

The Securities and Exchange Commission today announced that the Honorable Charles S. Haight, United States District Judge for the Southern District of New York, has entered a final judgment against defendants Kenneth W. Winger and Paul R. Humphreys. Winger, the former Chief Executive Officer of Safety-Kleen Corp., and Humphreys, the former Chief Financial Officer, were permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b 5 thereunder. Humphreys was also enjoined from violating books and records provisions, Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. Further, both defendants were enjoined from violating the lying to auditors provision, Exchange Act Rule 13b2-2, and both were permanently barred from serving as an officer or director of a public company. The judgment orders Winger to pay approximately $440,000 in disgorgement, prejudgment interest and civil penalties, and orders Humphreys to pay more than $150,000. The judgment was entered upon default.

The Commission's Complaint, which was filed on December 12, 2002, alleged that from at least November 1998 through March 2000, Safety-Kleen's senior executives engaged in a massive accounting fraud by materially overstating the company's revenue and earnings in periodic reports filed with the Commission and in press releases issued by the company. They carried out the scheme primarily by making inappropriate quarterly accounting adjustments for the purpose of meeting Wall Street pro forma earnings expectations. The executives also fraudulently recorded approximately $38 million of cash that was generated by entering into speculative derivatives transactions, further distorting the company's true financial picture.

The complaint alleged that Humphreys orchestrated the fraudulent scheme. As set forth in the complaint, he engaged in the illegal conduct to create the illusion that predicted cost savings and business synergies from two large acquisitions were being achieved. In fact, the expected savings had not materialized, the company's business was declining rapidly, and the company was facing a severe cash flow problem. To make up for the earnings shortfall, Humphreys recorded, or directed others to record, numerous adjustments that were not in conformity with generally accepted accounting principles. According to the complaint, Winger signed Safety-Kleen's periodic reports and knew or was reckless in not knowing that the financial statements contained in those reports were materially false and misleading. Finally, the complaint alleged that Humphreys and Winger knew or were reckless in not knowing that the company's quarterly earnings press releases were materially false and misleading.

The entry of the final judgment against Winger and Humphreys concludes the litigation brought by the Commission arising out of the financial fraud at Safety-Kleen. Previously, Safety-Kleen and former employees William D. Ridings and Thomas W. Ritter, Jr. entered into settlements with the Commission. See Litigation Release No. 17891, dated December 12, 2002.